How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
Another thing that can drive investing is the fear of missing out, or FOMO. This particularly applies to tech giants and popular consumer-facing stocks.
What if you'd invested in Amazon (
AMZN Quick Quote AMZN - Free Report) ten years ago? It may not have been easy to hold on to AMZN for all that time, but if you did, how much would your investment be worth today? Amazon's Business In-Depth
With that in mind, let's take a look at Amazon's main business drivers.
Amazon.com is one of the largest e-commerce providers, with sprawling operations in North America, now spreading across the globe. Its online retail business revolves around the Prime program well-supported by the company’s massive distribution network. Further, the Whole Foods Market acquisition helped Amazon establish footprint in physical grocery supermarket space. Amazon also enjoys dominant position in the cloud-computing market, particularly in the Infrastructure as a Service (IaaS) space, thanks to Amazon Web Services (AWS), which is one of its high-margin generating businesses. Amazon has also become a household name with its Alexa powered Echo devices. Artificial Intelligence (AI) backed Alexa is helping the company sell products and services. Revenues were $386.1 billion in 2020. The company reports revenue under three broad heads—North America, International and AWS, which generated 61.2%, 27% and 11.8% of total revenues, respectively. Headquartered in Seattle, WA, Amazon targets three categories of customers—consumers, sellers and website developers. Consumers are offered variety, convenience and free delivery of goods displayed on the company’s websites. The agreements with sellers are varied, enabling them to use the company’s websites to either sell their merchandise directly, or redirect customers to the sellers’ own branded websites. In case of the latter arrangement, Amazon earns a fee for the sales thus generated. Competition comes in the form of traditional retailers, other online retailers, media companies, web portals, search engines, e-commerce companies and cloud computing service providers.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Amazon, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in June 2011 would be worth $17,957.70, or a gain of 1,695.77%, as of June 11, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 233.54% and gold's return of 19.10% over the same time frame.
Going forward, analysts are expecting more upside for AMZN.
Amazon is gaining on solid Prime momentum owing to ultrafast delivery services and strong content portfolio. Further, coronavirus-led spike in online orders continues to be a major tailwind. Also, solid growth in its online stores sales remains a positive. Moreover, surge in online grocery shopping is another positive. Additionally, strong adoption rate of AWS is aiding the company’s cloud dominance. Moreover, expanding AWS services portfolio is continuously helping Amazon in gaining further momentum among the customers. Further, improving Alexa skills and expanding smart home products portfolio are positives. Additionally, strong momentum across Amazon Music is a tailwind. The stock has outperformed its industry on a year-to-date basis. However, accelerating coronavirus related expenses remain risks for the company’s margin expansion.
Over the past four weeks, shares have rallied 5.95%, and there have been 16 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.